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Periodicals > Link-Up Digital
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Positives and Negatives of Amazon.com
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Link-Up Digital

Amazon, the Internet retailer that revolutionized ecommerce, turned 20 this year. It’s the largest online marketplace in the U.S., with revenue of $89 billion last year. Its stock is flying high too, up 30% this year thus far. 

It wasn’t that long ago that buying online was an iffy proposition, with companies out there you never heard of and shipping costs that might turn into a gotcha. More than any other Internet site, Amazon made buying online safe and popular.

The company started out in 1994 with the name Cadabra before it was changed to Amazon.com the following year, the same year it went live. Like many Internet names, both are silly. Company founder Jeff Bezos, who’s still president and CEO, chose Amazon because it sounded exotic, because the Amazon River is the “biggest” in the world and he planned on making his online store the biggest, and because the name began with an A and would show up near the top of alphabetized lists.

Amazon may be the U.S.’s largest online retailer, but it’s the world’s second largest. Ranking ahead of it is Alibaba, China’s largest ecommerce company, which controls 80% of the Chinese market.

Amazon started out as an online bookstore before diversifying into music CDs, movie DVDs, video games, software, electronics, clothes, furniture, toys, jewelry, and much other merchandise.

Its book-selling business drove Borders and many independent bookstores out of business and has seriously challenged Barnes & Noble. It also created a vibrant secondhand book market, with many sellers famously offering used paperbacks for $0.01 plus $3.99 for postage and handling.

With its market-leading Kindle ebook reader, Amazon in the minds of some may in the future threaten the very survival of printed books. Several million books are currently available for download, and a single Kindle can hold thousands of books, also having search capabilities that printed books don’t have.

With its Amazon Web Services, Amazon is also the dominant player in the corporate cloud computing services market, which lets customers ramp up or down capacity as needed. This is advantageous to Amazon Web Service’s one million plus clients compared with having to buy more hardware and software or having excess equipment on hand. Amazon recently eliminated, however, the free consumer-oriented component to its cloud storage service, Amazon Cloud Drive.

The company is currently an also-ran in the video on-demand market. Its Amazon Instant Video is considerably behind Netflix and Hulu in terms of viewers and content.

Other Amazon services haven’t fared well either. Endless.com sold high-end handbags and shoes but never made a large enough dent and went away. Recently, Amazon made a go at the smartphone market, but its Fire phone was largely a way to entice people to buy from Amazon, and people largely ignored it.

Previously, Amazon Auctions never provided serious competition to online auctions market leader eBay, and after launching in 1999 it was killed off by Amazon. Like eBay has been doing for some years now, however, Amazon Marketplace (www.amazon.com/marketplace) lets individuals as well as businesses sell wares at fixed prices. About 40% of the merchandise sold on Amazon Marketplace is from third-party sellers, with the remainder from Amazon itself.

Amazon has always done a good job of providing feedback to shoppers about the reliability of individual sellers. This hasn’t prevented people, however, from writing bogus positive reviews or bogus sabotage reviews. And it hasn’t prevented shady businesses from offering such services to others for a fee.

To try to crack down on this, Amazon recently launched a new system that gives more weight to reviews deemed helpful by other Amazon customers, to reviews from verified purchasers of the particular product, and to recent reviews.

Amazon hasn’t been without other controversy. It has received similar kinds of criticisms as Walmart regarding poor working conditions for employees. Employees have been tracked on a minute-by-minute basis and threatened with reprimands by supervisors if they talk among themselves about working conditions.

Some former Amazon shoppers have migrated to the online marketplace Etsy (www.etsy.com), which claims to value people over profit, community over greed. A brand-new startup, Jet.com (www.jet.com), was just launched by a former Amazon manager with the express purpose of taking on Amazon, a daunting prospect.

In the meantime, Amazon is investing heavily in robotic technology for its warehouses to speed the movement of books, toys, and other products across warehouse floors and the distribution of them on to customers. Robots may break down, but they don’t complain of overwork. 


Reid Goldsborough is a syndicated columnist and author of the book Straight Talk About the Information Superhighway. He can be reached at reidgoldsborough@gmail.com or reidgold.com.


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